DoD awards BAE Systems $24.6M for aircraft parts, raising questions on competition and value

Contract Overview

Contract Amount: $24,579,830 ($24.6M)

Contractor: BAE Systems Information and Electronic Systems Integration Inc.

Awarding Agency: Department of Defense

Start Date: 2023-10-02

End Date: 2026-09-30

Contract Duration: 1,094 days

Daily Burn Rate: $22.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BIG SAFARI

Place of Performance

Location: NASHUA, HILLSBOROUGH County, NEW HAMPSHIRE, 03060

State: New Hampshire Government Spending

Plain-Language Summary

Department of Defense obligated $24.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC. for work described as: BIG SAFARI Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery. 2. Significant contract value for specialized aircraft parts manufacturing. 3. Long performance period suggests a need for sustained support. 4. Cost-plus-fixed-fee structure may incentivize cost escalation. 5. Lack of small business participation noted. 6. Geographic concentration in New Hampshire for contract performance.

Value Assessment

Rating: questionable

The contract value of $24.6 million for aircraft parts is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex or uncertain work, can lead to higher overall costs compared to fixed-price contracts if not managed rigorously. The absence of a clear per-unit cost benchmark makes a precise value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using the 'not competed' method, indicating a sole-source procurement. This means only one vendor, BAE Systems Information and Electronic Systems Integration Inc., was solicited. While sole-source awards can be justified for unique capabilities or urgent needs, they bypass the competitive process that typically drives down prices and fosters innovation. The lack of competition here means taxpayers did not benefit from potential cost savings that could arise from multiple bidders vying for the contract.

Taxpayer Impact: The absence of competition means taxpayers may have paid a premium for these aircraft parts, as there was no market pressure to ensure the lowest possible price.

Public Impact

The Department of the Air Force benefits from the acquisition of essential aircraft parts. BAE Systems, a major defense contractor, is the primary beneficiary of the contract value. The contract supports specialized manufacturing capabilities within the defense industrial base. Workforce in New Hampshire may be supported by this contract's execution.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price discovery and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can lead to cost overruns if not closely monitored.
Lack of small business involvement may miss opportunities for economic inclusion.
Limited transparency due to sole-source nature of the procurement.

Positive Signals

Award to an established defense contractor suggests potential for reliable delivery.
Long contract duration indicates a strategic need for these specific parts.
Contract supports critical aircraft components, essential for military readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for defense aerospace components is characterized by high technical requirements, stringent quality standards, and often long production cycles. Spending in this area is driven by military readiness needs and the sustainment of aging aircraft fleets. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar specialized aircraft components.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting plans involving small businesses. The absence of small business participation in a contract of this magnitude represents a missed opportunity to leverage the capabilities of smaller firms within the defense supply chain and could limit the broader economic impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General's office within the Department of Defense may conduct audits or investigations into the contract's execution, particularly concerning cost controls and performance. Transparency is limited due to the sole-source nature, making public oversight more challenging.

Related Government Programs

Aircraft Parts Manufacturing
Defense Logistics Agency Contracts
Air Force Sustainment Programs
BAE Systems Defense Contracts

Risk Flags

Sole-source procurement
Cost-plus-fixed-fee pricing
Lack of small business participation
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.6 million to BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC.. BIG SAFARI

Who is the contractor on this award?

The obligated recipient is BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $24.6 million.

What is the period of performance?

Start: 2023-10-02. End: 2026-09-30.

What is the historical spending pattern for this specific type of aircraft part by the Department of Defense?

Analyzing historical spending for this specific aircraft part requires access to detailed procurement data beyond the scope of this summary. However, the Department of Defense (DoD) consistently spends billions annually on aircraft parts and sustainment. This includes both competitively procured items and sole-source awards for specialized or legacy components. Without knowing the exact part number or system it supports, a precise historical comparison is difficult. Generally, spending on such items can fluctuate based on fleet readiness requirements, modernization programs, and the availability of commercial alternatives. The current $24.6 million award suggests a significant, ongoing need for these parts, potentially indicating a critical component for a specific aircraft platform or a long-term sustainment effort.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar defense procurements?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is significant uncertainty in the costs involved, such as in research and development or complex manufacturing. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF generally shifts more cost risk to the government, as the final price is not predetermined. While it allows for flexibility and ensures contractors are willing to undertake uncertain work, it requires robust government oversight to control costs and prevent inefficiencies. For standard, well-defined aircraft parts, fixed-price contracts are often preferred as they provide greater price certainty and incentivize contractor efficiency.

What are the specific risks associated with a sole-source award for critical aircraft components?

Sole-source awards for critical aircraft components carry several risks. Firstly, the lack of competition can lead to inflated prices, as the contractor faces no market pressure to offer the most cost-effective solution. Secondly, it can reduce the incentive for the contractor to innovate or improve efficiency, knowing they are the only option. Thirdly, it creates a dependency on a single supplier, which can be problematic if that supplier experiences production issues, financial instability, or decides to exit the market. This dependency can jeopardize the supply chain for essential military equipment, impacting readiness. Finally, sole-source awards can sometimes be perceived as less transparent, potentially raising concerns about fairness and value for taxpayer money.

What is BAE Systems' track record with similar sole-source defense contracts?

BAE Systems is a major global defense contractor with extensive experience across various military platforms and systems. They frequently hold numerous contracts with the Department of Defense, many of which are sole-source due to the specialized nature of their offerings or existing platform integration. Their track record typically involves delivering complex systems and components, often under challenging conditions. However, like many large defense contractors, they have faced scrutiny regarding contract pricing and performance on specific sole-source awards. A detailed review of BAE Systems' specific contract history, including past performance evaluations and any disputes or audits related to sole-source procurements of similar aircraft parts, would be necessary for a comprehensive assessment.

Are there alternative suppliers or potential for competition for these aircraft parts in the future?

Determining the potential for future competition requires a deep understanding of the specific aircraft parts being procured, their technical specifications, and the existing intellectual property or manufacturing rights. If the parts are highly specialized, proprietary to BAE Systems, or require unique manufacturing processes and certifications, establishing competition may be difficult and costly. However, if the parts are based on more standardized designs or if alternative manufacturers possess the necessary capabilities and certifications, a competitive solicitation could be pursued in the future. The government often conducts market research to identify potential sources and encourage competition where feasible, especially for long-term sustainment needs.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ball Corporation

Address: 65 SPIT BROOK RD, NASHUA, NH, 03060

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $28,000,000

Exercised Options: $26,000,000

Current Obligation: $24,579,830

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $3,689,496

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862021G4028

IDV Type: BOA

Timeline